MONEY MORAL DILEMMA. Should Tina lend to close mate Stina?

One possibility would be to lend her a portion of the full amount (say £500) with an agreed repayment schedule. That way it will establish if she is a reliable repayer without risking too much AND as she will be paying less interest she will be able to reduce the capital amount quicker. When the £500 is paid off, the exercise could be repeated, possibly with a greater amount.
But don't feel obliged just because the money is available - too many people have come a cropper trying to help out, and lost a friendship into the bargain.